'Klin'-ing up: Effects of Polish tax reforms on those in and on those out
In 2007 and 2008 Polish governments introduced a series of reforms which led to a substantial reduction in the tax "wedge" (in Polish: "klin") on labour. These consisted of reductions in the disability rate of social security contributions (SSCs) and an introduction of an income tax credit for families with children. We show that the SSCs reforms on their own brought much greater reductions in the tax burden compared to a widely discussed 15% "flat tax", despite a very similar simulated cost. When considered together the package of introduced reforms reduced the mean ATR on total labour cost from 41.6% to 35.7%. This compares to the mean ATR of 39.6% which would result from the introduction of the "flat tax". In the analysis we present the effects of the reforms both for the employed and for the non-employed populations. The latter analysis is done in such a way as to account for the entire (simulated) distribution of wages of the non-employed and shows interesting differences between the effects of reforms on employed and non-employed individuals. We argue that to fully appreciate the effect of reductions in labour taxation it is important to bear in mind that one of the reasons for introducing them is to make employment more likely for those who currently do not work, and demonstrate that the introduced package has had a particularly important effect on non-employed second earners. Given the extent of the reductions in the "klin" it is somewhat surprising that so far so little attention has been given to the recent Polish reforms.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Richard Blundell & Alan Duncan & Julian McCrae & Costas Meghir, 2000. "The labour market impact of the working families’ tax credit," Fiscal Studies, Institute for Fiscal Studies, vol. 21(1), pages 75-103, March.
- Luca Nunziata, 2005.
"Institutions and Wage Determination: a Multi-country Approach,"
Oxford Bulletin of Economics and Statistics,
Department of Economics, University of Oxford, vol. 67(4), pages 435-466, 08.
- Luca Nunziata, 2001. "Institutions and Wage Determination: a Multi-Country Approach," Economics Papers 2001-W29, Economics Group, Nuffield College, University of Oxford.
- L. Nunziata, 2002. "Institutions and Wage Determination: A Multi-Country Approach," Working Papers 433, Dipartimento Scienze Economiche, Universita' di Bologna.
- Stephen Nickell & Luca Nunziata & Wolfgang Ochel, 2005. "Unemployment in the OECD Since the 1960s. What Do We Know?," Economic Journal, Royal Economic Society, vol. 115(500), pages 1-27, 01.
- Davis, J.B. & Zhang, J., 1995. "Measuring Marginal Income Tax Rates for Indididuals in Canada: Averages and Distributions Over Time," UWO Department of Economics Working Papers 9516, University of Western Ontario, Department of Economics.
- Gilles Saint-Paul, 2004. "Why are European Countries Diverging in their Unemployment Experience?," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 49-68, Fall.
- Saint-Paul, Gilles, 2004. "Why Are European Countries Diverging in Their Unemployment Experience?," IZA Discussion Papers 1066, Institute for the Study of Labor (IZA).
- Saint-Paul, Gilles, 2004. "Why are European Countries Diverging in their Unemployment Experience?," IDEI Working Papers 269, Institut d'Économie Industrielle (IDEI), Toulouse.
- Saint-Paul, Gilles, 2004. "Why are European Countries Diverging in their Unemployment Experience?," CEPR Discussion Papers 4328, C.E.P.R. Discussion Papers.
- Richard Disney, 2004. "Are contributions to public pension programmes a tax on employment?," Economic Policy, CEPR;CES;MSH, vol. 19(39), pages 267-311, 07.
- Ricardo Varsano & Kevin Kim & Michael Keen, 2006. "The "Flat Tax(es)"; Principles and Evidence," IMF Working Papers 06/218, .
- Stephen Nickell, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer.
- Mitra, Pradeep & Stern, Nicholas, 2003. "Tax systems in transition," Policy Research Working Paper Series 2947, The World Bank.
- Nickell, Stephen, 2001. " Fundamental Changes in the UK Labour Market," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(0), pages 715-736, Special I.
- Michal Myck & Howard Reed, 2006. "Tax and Benefit Reforms in a Model of Labour Market Transitions," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 75(3), pages 208-239.
- Michal Myck & Howard Reed, 2006. "Tax and Benefit Reforms in a Model of Labour Market Transitions," Discussion Papers of DIW Berlin 625, DIW Berlin, German Institute for Economic Research.
- Viktor Steiner & Katharina Wrohlich, 2004. "Household Taxation, Income Splitting and Labor Supply Incentives – A Microsimulation Study for Germany," CESifo Economic Studies, CESifo, vol. 50(3), pages 541-568.
- Viktor Steiner & Katharina Wrohlich, 2004. "Household Taxation, Income Splitting and Labor Supply Incentives: A Microsimulation Study for Germany," Discussion Papers of DIW Berlin 421, DIW Berlin, German Institute for Economic Research.
- Layard, Richard & Nickell, Stephen, 1986. "Unemployment in Britain," Economica, London School of Economics and Political Science, vol. 53(210(S)), pages 121-169, Supplemen.
- Lockwood, Ben & Manning, Alan, 1993. "Wage setting and the tax system theory and evidence for the United Kingdom," Journal of Public Economics, Elsevier, vol. 52(1), pages 1-29, August.
- Bargain, Olivier & Morawski, Leszek & Myck, Michal & Socha, Mieczyslaw, 2007. "As SIMPL As That: Introducing a Tax-Benefit Microsimulation Model for Poland," IZA Discussion Papers 2988, Institute for the Study of Labor (IZA).
- Horst Siebert, 1997. "Labor Market Rigidities: At the Root of Unemployment in Europe," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 37-54, Summer.
- Howell H Zee, 1996. "Taxation and Unemployment," IMF Working Papers 96/45, .
- Nickell, Stephen, 1998. "Unemployment: Questions and Some Answers," Economic Journal, Royal Economic Society, vol. 108(448), pages 802-816, May.
- James B. Davies & Junsen Zhang, 1996. "Measuring Marginal Income Tax Rates for Individuals in Canada: Averages and Distributions over Time," Canadian Journal of Economics, Canadian Economics Association, vol. 29(4), pages 959-975, November.
- Fiorito, Riccardo & Padrini, Flavio, 2001. " Distortionary Taxation and Labour Market Performance," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(2), pages 173-196, May.
- Vahram Stepanyan, 2003. "Reforming Tax Systems; Experience of the Baltics, Russia, and Other Countries of the Former Soviet Union," IMF Working Papers 03/173, . Full references (including those not matched with items on IDEAS)